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Ukrainian Grain Market Profile

Grain production is considered Ukrainian strategic production direction, due to grain being most important foodstuffs resource in Ukraine (as well as in most other countries). At time of the USSR, Ukrainian flour production was attributed especial attention to. At that time Ukraine was charged with mission of supplying flour to a number of fraternal republics; at that time a great deal of bakery integrated plants were constructed and there was no special problem as for finding up resources to assure those integrated plants proper functioning. For instance, in 1990-es second half Ukrainian grain output totaled 41.551.5million tons, with wheat annual output amounting to 18.427.4million tons (food wheat ≈ 6070%).

Table 1shows Ukrainian recent years grain production dynamics.

Within 1990-es second half wheat output situation had radically changed: wheat output declined over twice. In 2001/02wheat output started recovering, yet in 2003 it fell to record low.

Grain production lowering as well as last 50years Ukrainian record low wheat crop were due to massive winter sown grains frost destruction as well as vegetation period climatic conditions significant worsening.

Presently in Ukraine gradual recovery of all grains (incl. wheat) output, alongside with general economic positive changes, is noticed.

Fig.1. Ukrainian grains output, million tons

Table 1. Ukrainian grains/legumes production structure (million tons)

1999

2000

2001

2002

2003

2004

Total grains

24,7

24,4

39,7

38,8

20,2

41,7

Wheat

13,6

10,2

21,4

20,5

3,6

17,5

Barley

6,4

6,8

10,1

10,4

6,8

11,1

Rye

0,9

1,0

1,8

1,5

0,6

1,6

Maize

1,7

3,8

3,6

4,1

6,9

8,8

Oats

0,8

0,9

1,1

0,9

0,9

1,0

Legumes

0,4

0,5

0,6

0,6

0,6

0,8

Millet

0,2

0,1

0,2

0,1

0,3

0,5

Buckwheat

0,3

0,5

0,4

0,2

0,3

0,3

Other grains

0,4

0,6

0,5

0,5

0,2

0,2

Ukrainian consumption fund includes grain for flour milling, groats, brewery and spirit industries. Thus, in particular flour and groats production required correspondingly 5.76.0million tons and ≈ 0.8million tons grain annually.

Naturally, wheat is prevailing in grain consumption fund; food/feed wheat proportion differs depending on regions, due to different soil and climatic conditions. In southern regions food wheat proportion is, as a rule, higher against other regions. Until 1996, in Ukraine there was State grain ordering system, with food grain prevailing in its structure. Most flour millers at that time were processing grain received from State grain orderings system, thus assuring their stable resources supply.

One of recent years Ukrainian domestic market specifics is growing tendency of supplying Ukrainian rural population with grain as labour payment in kind (besides, individual agrarian economies are rising their own grain output as well). As a result, due to individual agrarian economies getting increasingly more supplied with grain, certain food/feed grain misbalance has appeared on domestic grain market: thus, individual agrarian economies, having piled enough 3class wheat, often use it as fodder (and vice versa).

Grain Processing

Flour

Wheat flour is main flour produced in Ukraine, yet, except it, some other flours (firstly rye and maize) are also produced. Besides, buckwheat, rice and oats flours are produced as well, though at small scale. Table 2shows data on Ukrainian production of some kinds/sorts flour (for domestic flour millers which made reports to State Statistics Committee).

Table 2. Ukrainian flour production structure as for kinds of flour (thousand tons)

1999

2000

2001

2002

2003

Total flour

3373

3067

2984

2986

2819

Total wheat flour

3050

2710

2686

2724

2540

Total rye flour

303

354

289

252

269

Total maize flour

9

9

5

6,7

4,5

Feed flour

2495

1726

1718

2018

1363

Data source: Ukrainian State Statistics Committee

As to official statistics, wheat flour output shared 9091% of

2001/03Ukrainian total (as to analysts, this index can reach 95%). Rye flour output holds an important place in Ukrainian total, - 810% (or 5% as to non-official data). Production of other kinds flour doesnt influence much Ukrainian total.

Mixed Feeds

There were significant changes in last years mixed feeds production: thus, due to poultry mixed feed output growth, in 2003there were no seasonal output fluctuations, what is explained by fact of poultry industry demand being influenced only with poultry number, not with seasonal shortening of concentrated fodder consumption (as it is the case with pigs/cattle breeding due to pig/cattle coming over to succulent fodders within summer period).

Together with mixed feeds quantitative growth as well their quality rise is

admitted: thus, within last year microadditives/protein-vitamin additives mixed feeds output has substantially risen.

Leading domestic mixed feed producers presently remain the same as within previous

years. It is to be admitted, within last year poultry mixed feeds companies output has sharply grown, while pigs/cattle mixed feeds companies output has declined or remained unchanged. Significant mixed feeds output growth is noticed at Complex Agromars, Constanta-Agro, Grakovskiy KHP and Dykanskiy Z.

Table 3. Ukrainian mixed feed output as for kinds of mixed feeds (thousand tons)

2000

2001

2002

2003

In total

1126

1255

1810

1892

For poultry

591

722

980

1172

For pigs

346

333

570

513

For cattle

176

176

236

186

For fish

6

22

20

15

Others

7

2

4

6

Groats

Domestic groats market is divided into two parts: groats produced at specialized companies (6570% market) and groats produced at small hulling mills, in home-made way (3035% market). Constant output growth of home-made groats is due to lower prices offered by small hulling mills owners (yet groats quality in most cases is much lower).

Groats produced at small hulling mills are consumed mainly by rural population as well as district centers inhabitants, while higher quality groats are offered in big cities as well export shipped.

Most experts estimate annual domestic groats market capacity 450500.000t. Due to domestic groats import being most insignificant (1.1001.500t yearly + 70.000t rice groats yearly) as well as annual export equaling to 60.00070.000t, it is possible to assume, that 110.000130.000t groats, which are presently missing in official statistics, are supplied to market exactly by small hulling mills owners.

As to State Statistics Committee, last two years groats output is gradually declining, due to recent years main groats crops failure as well as shadow groats production growth. It is to be mentioned, within recent time buckwheat groats output share is gradually rising up in groats total output, due to buckwheat groats domestic/export demand growth. Though 2003buckwheat groats output share has sharply declined (due to buckwheat crop failure), it can be considered just a temporary phenomenon and buckwheat output recovery is expected to take place in 2004. Buckwheat groats and ground/broken peas are main Ukrainian exported groats, sharing 7075% total Ukrainian groats export.

Table 4. Ukrainian groats output (thousand tons)

Product

1999

2000

2001

2002

2003

Total groats

344,4

293,7

300,5

295,7

245,5

Buckwheat groats

126,4

108,1

143,5

145,2

101,9

Peas

31,8

28,6

25,3

14,2

13,3

Semolina

19,5

17,6

17,3

23,5

18,9

Pearl barley groats,wheat groats, fine barley groats

82,8

73,9

41,6

49,9

46,0

Millet

30,4

19,5

19,5

13,4

11,7

Others

53,5

46

53,3

49,5

53,7

Data source: Ukrainian State Statistics Committee

Export Trade

Feed wheat /barley remain Ukrainian main export grains (over 85% total export), due to their domestic output being the highest and world competency the lowest. Ukrainian grains are exported mainly to Mediterranean countries (if high crop years are taken into consideration).

Most stable export grain is barley, due to its low domestic consumption as well as relatively high resistance against unfavorable weather conditions.

Ukrainian maize crops/exports are growing up as well.

Within low crop years, however, main export grains are spring sown grains, due to their being less vulnerable to unfavorable weather conditions than winter sown grains.

Within last years Ukrainian grain export market shortening tendency is appearing, due to Ukrainian grains high prices as well as East European and Mediterranean countries having joined EU. Besides, Ukrainian grains practically arent exported to South Asian countries (South Korea, Indonesia, Philippines, Japan), due to Australian expansion on that market.

Thats why 2003/04MY Ukrainian groats export geographical range has significantly narrowed against previous years. This tendency is most probable to remain within next season.

Maize export is presently the most rapidly growing one, due to maize crops boosting as well as agrarians preferring to grow it owing to active demand and high prices. Within this season Ukraine will export over 1million tons maize (absolute record), mainly due to significant demand on part of Russia, Hungary and Romania, yet within next season situation can cardinally change and Ukrainian maize will be remained unwanted.

Table 1. Ukrainian grains export (1998/99 2002/03MY)

Season/Product

Wheat

Barley

Rye

Maize

Others

In total

1998/99

4351

814

123

472

81

5841

1999/00

1908

783

171

62

49

2973

2000/01

80

1023

2

403

58

1566

2001/02

5503

2810

292

299

98

9002

2002/03

6625

2950

286

856

28

10745

2003/04*

10

1300

0

1000

100

2510

Table shows, that wheat exports are sharply fluctuating, due to wheat crops fluctuations.

Since most wheat grown in Ukraine is winter sown wheat, it is subjected to frost destruction, damping-out, etc. The same concerns rye. All other grains are spring sown, what assures crops/exports certain stability.

22.06.2005

Agrarian Week in digital



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